Stocks Mildly Lower into Final Hour on Lingering Credit Fears and Rise in Energy Prices

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Computer longs and I-Banking longs. I added (IWM)/(QQQQ) hedges and added to my (EEM) short today, thus leaving the Portfolio 75% net long. The overall tone of the market is neutral today as the advance/decline line is neutral, sector performance is mixed and volume is very heavy. My intraday gauge of investor angst is at an elevated level. LoopRumors.com is reporting that today's rumor that Apple (AAPL) is scaling back production of the iPhone is unfounded. The other rumor floating around that iPod production is being cut is also likely unfounded, according to Piper Jaffray. The Piper analyst also thinks that if an iPod production cut is occurring, it may be a sign of a new version coming, which is a positive. I continue to believe that AAPL will move much higher longer term and view any near-term pullbacks as just another buying opportunity. Heavily shorted Under Armour (UA), one of my longs, is soaring 15% to a new record high on a very positive earnings report. As I have said before, I have never seen more reckless shorting in my life. Numerous stocks with 10%+ of the float short have risen by stunning amounts over the last year. As I have said before, I think the days of throwing short darts at stocks with high P/Es and hitting a bull's-eye with little in the way of downside catalysts are over as the “growth style” continues to significantly outperform the “value style.” Weekly retail sales came in with a 2.8% gain for the second straight week. This is up from a weekly average of 0.1% gains from mid-April through mid-May and up from a 1.4% gain earlier this month. I still expect retail sales to head back above average levels this fall as energy prices fall, stocks rise, the job market remains healthy, inflation decelerates to low levels and housing fears subside. I expect US stocks to trade modestly higher into the close from current levels on bargain-hunting, more economic optimism and short-covering.